AIDEA to assist with jack-up rig

Posted: Friday, February 18, 2011

By Staff Report

The Alaska Industrial Development and Export Authority is taking steps toward helping oil and gas exploration in the Cook Inlet.

The group's board of directors approved spending up to $200,000 on developing agreements that would allow the authority to invest $30 million on bringing a jack-up rig to the inlet as a joint project with Buccaneer Energy.

In a statement, Sen. Tom Wagoner, R-Kenai, said he was happy about the news.

"This is a significant milestone," Wagoner said. "The parties have reached important agreements that will allow the project to move forward. I applaud AIDEA for its due diligence and careful negotiations with Buccaneer Energy. Bringing a jack-up rig to the Cook Inlet will reinvigorate oil and gas exploration in the basin."

The proposed agreement would involve a contribution of $30 million from the authority, and require the energy company to start the first well in 2011, and drill at least four wells in the Inlet with the rig.

According to the Buccaneer press release, the company is also looking at having an Asian firm become a partner in the project.

Buccaneer expects to present the agreement to the AIDEA board in the next 30-45 days. The company says it is in the process of getting permits for four wells, and expects to have all of them by May of this year.

In his statement, Wagoner also said that the incentives he worked on last year helped moved the project forward. Buccaneer's statement includes a rundown of the incentive program, which was meant to help encourage development to prevent the predicted natural gas shortage in southcentral. The plan repays operators for successful drilling efforts in the Cook Inlet.